“Seasoned Real Estate Investor with several properties needing full Rehab. In search of General Contractors with fair pricing, quality work, clean job sites, licensed and insured and who work directly with their crews. Contact me directly for additional details. Ready to hire!”
Something along those lines will grab the GC’s attention. Once they call you, you will need to phone screen them.
Related: Don’t Overlook This Potentially Big Rental Property Mistake
Questions to Ask a Prospective General Contractor
It is usually easier to find someone who has done work for another investor. This is mainly because they will likely understand that you are not looking for regular homeowner prices.
You bring them the benefit of more jobs which means more work and more money! You help them by providing a way for them to avoid having to constantly find more work and compete for jobs.
Ask if they’ve done any work for anyone else that is flipping houses or is a real estate investor. If they have, ask how many jobs they’ve done and over what period of time.
Ask for names and phone numbers that are willing to provide a reference regarding their work. Find out what they liked about working with an investor and if they’d like to work for other house flippers.
If they have worked for an investor that flips homes, ask if they have before and after pictures of the property(ies) they could share with you? Ask about the rehab budget for the property and if they would be able to share the scope of work? Explain that you ask this of all new potential GCs.
Other questions to ask:
- How long have you been doing this line of work?
- Do you do the work yourself with additional help, or do you sub everything out? Subbing out can be more expensive but is not necessarily something to avoid.
- How many people do you have working for you? If they don’t or just have one or two guys, it may be difficult for them to handle big rehabs and definitely will be difficult if you have more than one rehab going at a time.
- Is there anything you don’t do? Do they do foundation work? Do they do minor electrical or plumbing? Do they do roofing? What about framing? Some guys really only want to do minor things like drywall and painting. Ask if there is anything they don’t like to do. In this business it is best to find someone that can do it all or hire people that can fill in the gaps.
- Are you currently busy with work? If so, ask when they think they might be free. You don’t want to wait three months for someone to start your job. Trust me.
- What projects are you currently working on and when I could meet you to walk the job? This will help you determine if you could foresee a working relationship. We are in the real estate industry, however you need a good working relationship with your GC.
- Are you licensed and insured? This one is up to you. They don’t have to be to do general contracting work and light rehabs, however I strongly encourage you to only use those who are. Some will not be licensed but will be able to have friends or associates pull permits for them when they are needed. You really should have licensed contractors for specialized work like electrical, plumbing, HVAC, roofing etc.
The insurance piece is a big deal especially when working with hard money lenders. They will want to confirm that your contractor is insured since they will have a large financial interest and want to secure that interest not only through a lien position on title but also protecting their investment.
Can I use funds from my IRA to renovate property to sell it at a higher price?
Yes. However, your IRA must pay all expenses associated with a property that it owns, including renovations. Further, all proceeds from the sale of the renovated property must be deposited into your IRA.
If I invested in a rental property with my IRA, how does the rental income get into my account?
Rental payments are sent to Equity Trust for the benefit of (FBO) your IRA. The checks or money order should be made payable to: “Equity Trust Company Custodian FBO [Your Name] IRA.”
Once received, the checks or money orders are deposited into your IRA. All checks must be sent to Equity Trust with a payment coupon.
About the Author
Over the past 20 years, Nick Baur, a St. Louis native, has had a passion for real estate. He has been a party to thousands of real estate transactions and generated over 25,000 leads in his real estate businesses. He is the owner of Real Estate Rehab and the founder/CEO of the South Side Investment Club and SSIC Inner Circle, the coaching and mentoring arm of the South Side Investment Club. He is active in St. Louis real estate investing through Real Estate Rehab but truly enjoys teaching others the ins-and-outs of how to use real estate to build a lifestyle and the long-term wealth that they deserve.
Nick Baur is not an employee of Equity Trust Company. Opinions or ideas expressed are not necessarily those of Equity Trust Company nor do they reflect their views or endorsement. These materials are for informational purposes only. Equity Trust Company, and their affiliates, representatives and officers do not provide legal or tax advice. Investing involves risk, including possible loss of principal.